Well, guidelines continue to change for Fannie Mae & Freddie Mac associated loans…this time, the change has a direct affect on how you might be able to qualify for the purchase of a new primary residence while retaining and converting your current residence into a rental property…as of August 1st, 2008 buyers who are interested in pursuing this route to build their wealth will need to provide their lender with the following in order for their newly acquired “rental income” to count towards the financial qualification of their new home mortgage: a fully executed lease agreeement, a receipt of deposit from the bank for the tenant’s required security deposit, and the big kicker, the newly converted rental property must contain at least 30% equity. If not, you guessed it, the “extra rental income” is not able to be used as part of qualifying for your replacement home purchase. You may ask why such a harsh equity requirement, well, the speculation consists of the banks’ attempt to prevent home owners from having the “new rental property” slip into foreclosure. If a home owner has substantial equity in their property, they are more likley maintain their property and have pride of home ownership. So, the morale of this story is check with your local lender about the ever changing guidelines that may affect your next home purchase.